Controversy Over Hurricane Deductibles May Just Be Beginning

The deductibles are based on the structure coverage limit of the policy, not the “value of the home.” Even though a home may be worth $500,000 that doesn’t necessarily mean the insurance limit is $500,000. The limit on the policy may be less.

It does state in the article “covered value of the home”. I don’t say this to thumb my nose at your comment, just trying to give Insurancel Journal some credit, they usually have it half-a$$ed! Have a great day :)

However, if there’s a motgagee, the “limit” may include the value of the land since it is included in the mortgage amount. This is going to be very tricky from a co-insurance, ITV and deductible standpoint. The intent is to cover the structure only but…E&O’s may come into play!

Mortgagees recognize that insurance doesn’t insure the land itself. Regardless of how the limit might have been established (market value, loan value), lenders understand that the insurance coverage is for the cost to repair/replace the structure. E&O would only come into play if someone in the chain of insurance procurement failed to identify an appropriate insurable value for the building.

I don’t live on the East Coast, but it’s insurance 101 that land is not included on any policy. An agents E&O comes into play if the agent unknowingly set up his client to have a co-insurance issue-or-an agent trusted his client’s advice and used the client’s figure for the home value and not documenting it…

So what’s Governor Cuomo’s next move, is he going to prohibit Windstorm Deductibles all together for this event? If so, can insurers bill the policyholders for the difference in premium they would have had to pay if their policy had been rated without said deductible? I’m sure insurers won’t do that, but it’s the principle of this that bothers me. Insurers are always viewed as “the bad guy” in these cases when we are the industry that actually gets people back in their homes, cars, etc. I’m not saying that there are not some unethical folks out there, but I think the vast majority of professionals I know are out to do the right thing by their customers. When government interferes like this, it just ends up costing all insureds more in the long run.

It’s one thing if a Governor has met with industry representatives
and been advised by them what their policies include and require,
then used his platform to spread their message, and support them,
and quite another when a politician seizes on a catastrophe to cut
a leg off of the economy’s financial infrastructure (capital, banking, insurance).

One of my customers told me I’m doom and gloom, because my job is to ask people to think about what can go wrong, in order to plan
for how they will financially react in case it happens. I don’t
use fear to sell, I just try to prepare people. If they choose to
not insure something, I’m fine with it. If their choice later
proves ill advised, I’m not responsible for their informed choice.

there ain’t no free lunch, and for the insurance industry to stay viable and be solvent to pay future claims, the additional costs will have to be addressed. if not now with the deductible, then in future rates when the loss is made up.

Rate increases are not implemented to “make up” for losses. Insurance pricing is prospective in that the company tries to predict the types of losses they may pay in the future. Yes, Sandy will now change the view of how much premium is needed to pay for future losses, but companies don’t try to “make up” for losses and regulators don’t allow it.

You are probably technically correct, but practically, you are wrong. That’s why all the years when insurers are piling up billions in profits when they dodge catastrophies, regulators are
always playing the game of how much of an increase to approve.
And they don’t call insurers in after record profits, and force
them to issue refund checks to policyholders.

Some people would clearly prefer a national co-op where all the
policies are issued online, and assigned in random to local insurers for claims adjusting – ala Medicare. Cuts out the agents
100%, pays the insurers to handle claims as defined by the Feds.
Would it work? Does Medicare work? Yes, and Medicare has a
estimated 40% fraud rate. Well, who cares? It’s not like it’s
our money being stolen. It’s taxpayer’s money!

…can’t wait until the policyholders realize what the co-insurance penalty is. There’s always a big scream about that. Will the governors waive THAT? I’m personally irritated with Gov. Cuomo’s action considering that it takes FOREVER to get a filing approved in New York – even a rate reduction, or a coverage that is advantageous to our insureds.

Good point. However we found in Fla that companies were reluctant to exercise the co-insurance rules back in 2004. That would have created more negative publicity than the hurricane deductible issues. Good luck.

He’s the almighty now. Big proponent of the chicken little- I mean- global warming propoganda. The planet has taken on changes throughiout centuries due to natural adaptations to ever changing weather. Oh…I’m sorry did I say WEATHER! Good grief! Go hug a tree, Cuomo!!!!!!!!!!!!!!!!!!

Go read a book! Anyone who denies climate change has been suckered by propaganda. “The planet has taken on changes throughout centuries due to natural adaptations to ever changing weather.” What the hell does that mean?! Literally thousands of scientists have examined and re-examined the available data and climate models, and have reached a consensus that the Earth is indeed warming and that man’s activities play at least some part in it. If you know nothing about climate science (and unless you’re familiar with oceanography or meteorology, you probably don’t), keep your gibberish to yourself. And if you don’t believe in climate change, you’re right up there with the boneheads who think that dinosaurs and fossils are fake and that evolution is just a myth too.

I’m amazed that this action is being taken. The ruling will take standard insurance carriers out of the market if they can’t enforce the terms and conditions of the insurance contract. After all, if the insurer knew going in that they would not be able to enforce the wind deductible, it’s likely that the policy never would have been written.

Is it amazing, though? I looked up the definition of a post-tropical storm. It has a specific (and pre-defined) definition based on scientific measurements like maximum sustained wind speed. It appears the storm struck some areas as a hurricane but weakened into a post-tropical storm prior to making landfall in the northeast. Are they saying a % Wind/Hail deductible will not be applicable? Or just that specifically a % Hurricane deductible will not apply because the wind speeds were tropical storm and not hurricane? I wonder if they have % Named Storm and if that would apply, since usually the Named Storm wording would include a named tropical storm such as this.

Libby, yes, in your more Southern East Coast states (FL, SC, NC, VA, GA) companies have taken to 1. Hurricane Deductibles- stating that it is an actual hurricane (most companies use the defined wind speed by the NWS)that makes landfall for the deducitble to apply 2. Named Storm- stating that any storm that is named makes landfall and the deductible applies 3. Wind/Hail- stating any wind/hail storm, named or not, Nor-easter or hurricane this deductible would apply. Hope that helps, have a great day all!

Florida’s former Governor chased out all of the major insurance carriers when they froze premiums after 4 major hurricanes struck the State. Now you only have local carriers. The same will happen in NY, NJ and CT. Soon after more politicians override contracts, no major carriers will offer hurricane or wind coverage. So, if you don’t like Florida…move to NY and enjoy their nice State income tax.

Sometimes instead of politicians they seem to act more like polluticians – craming the books with badly written ill conceived
laws that create a need for even more of the same.

Politicians ought to be forced to take a oath like MDs: I will vote for no law that does damage to my fellow citizens even if
it’s good for my personal constituents, and particularly if it’s
backed over whelmingly by campaign donations.

If we didn’t have the standard dynamic of everyone out for themselves in the six ring circus of federal, state, banking, insurance, agents, and consumer advocates, maybe we could design
products that filled the people’s needs without, being unfair,
and without putting any of us out of business? I’ve watched this
zoo for over 40 years, and it’s not getting better.

I remember working Hurricane Fredrick in Mobile Alabama for a major carrier that included coverage for fences caused by wind damage, At that time another major carrier, (I won’t name it, but it has good hands) didn’t cover them.

A week into the storm the Governor of the state made a declaration that all HO policies would cover wind damage to fences. That was that.

Since the writer quotes Robert Hunter as though he is an authority, I have very little confidence in what has been written. Robert Hunter is just an idiot that loves to run his mouth. The Insurance Journal should understand that his opinion is worthless bilge.

“autopm” takes exception to my comments about rates increasing, but todays headlines in another insurance magazine, from a very high person in the insurance industry, sayss exactly the same thing. if a company’s surplus shows a decline due to loss payments, then rates are going up and underwriting will tighten. no matter what regulations say about being proactive in rates, heavy losses to surplus and capital have to be made up in the future. again, there ain’t no free lunch.

As a Farmers agent in Texas we have a named storm or cyclone deductible. Basically, if the storm has been given a name – tropical storm or hurricane – it carries this deductible as long as it is a named storm and for 24 hours afterwards. The true devil is in the detail. The deductible clause reads that if the storm causes damage within 24 hours of when it was down graded from a named storm status that the named storm deductible will still apply. Example: Hurricane Ike was down graded from a named tropical storm to a no-name tropical depression just after it headed north of Bryan-College Station, Texas. It hit the Dallas-Fort Worth Metroplex 5 to 6 hours later – which is about 120 miles to the north. Thus, damages in the metroplex were paid using the named storm deductible because it had been a named storm less than 24 hours before hitting that area.

I don’t live on the water. I don’t live on the edge of a cliff. I don’t live on an earthquake fault. I don’t live in a fire zone. I don’t live in tornado alley and I don’t live in a mudslide zone, SO WHY does MY homeowner’s insurance keep going UP with NO claims from ME! I have ALREADY been informed, that next August, my homeowner’s insurance -Danbury Insurance- will increase by approximately 68%! That is on top of a $300.00+ increase this year! That increase ALSO involved making my Umbrella Policy SEPARATE from my homeowner’s policy which cost me another $200.00+! WHY!

People who live or want to live in these danger zones should be the ones paying the TRUE premium to cover their property that keeps getting destroyed time after time after time! If the insurance companies keep covering them then they are just as irresponsible!

it’s getting to point where you need a DEGREE in SEMANTICS from YALE to decipher your insurance policies!

You didn’t say where you live, just that you’re not subject to the
standard list of catastrophies. For insurance to work, whatever
risks are chosen to be covered need to be spread far and wide with
enough money collected to pay the expecte losses, and deliver a profit to insurers.

The problem is the conflicts that arrise when government allows the
building of substandard housing in catastrophes prone areas, then
either fails to assure that private insurance will be affordable,
or where it isn’t, the government subsidizes National Flood policies. Every pays for government subsidies through taxes, we
just never know how much is costs us.

If you’re in such a relatively low risk area, then why would you
put up with such rate increases when so many other insurers ought
to be competing for your business?

Why are your rates going up? Why are you asking this question on a comment section when only your agent/carrier could possibly answer this question for you? Was there an addition to your home? Did you get a pitbull this year? Is your home (unknowingly to you) actually in a potential natural disater area (for example most people in MA don’t realize we’re right ontop of a fault line).

I understand you’re frustrated, and you probably have good reason to be, but attempting to seek out answers from randoms online who don’t know your exact situation is pointless. You need to ask your carrier or agent to explain why rates are increasing for you.

Hurricne deductibles are one thing, but I personally have a real objection to all-wind deductibles. I don’t believe that windstorms cause as much widespread damage as hurricanes. Wind has traditionally been an insurable hazard while hurricanes have become less so due to the profusion of home now affected and that is understandable. But, if this “lasering” of policies keeps up, we might be going back to issuing fire-only insurance policies.

For as long as I have been alive the Constituion has been used as Washington D.C. toliet paper. The past decade has been the obviously the worst, it seems like a game now to see how much these politicans can get away with ignoring the Constituion.